With little fanfare, legislation to cut senior citizen price discounts is
making its way through the National Assembly. Introduced by Leandro Avila
(PRD-San Miguelito), the former public employees union leader who earlier
sponsored the government's unpopular Seguro Social reforms, the proposal
would reduce discounts on movies, sporting events and other entertainment
services from 50% to 20%; fares on inter-urban buses from 30% to 20%;
hotel and pensionado rooms from 50% to 30% on weekdays and from 30% to 15%
on weekends; Panamanian passports from 50% to 25%; and telephone rate
discounts from 25% to 15%. Reductions in the senior and retiree discounts
for air fares, real estate taxes, household appliances and insurance
premiums are also under consideration. The proposal, called Anteproyecto
de Ley No. 179, is in the legislature's Labor and Social Welfare
Committee. Retirees and senior citizens who are residents of Panama ---
whether Panamanian citizens or not --- have long enjoyed a wide range of
price discounts, but the Torrijos administration is committed to
neoliberal economic policies that cut back the living standards of
Panama's older generations as a supposed way to improve the business
climate.

RP interest rates up quarter point

Following the lead of the US Federal Reserve Bank as they usually do,
banks here have raised interest rates by one-quarter of one percent. For
somebody making mortgage payments on a $90,000 home, for example, this
would typically mean a rise in monthly payments from $506.95 to $520.72.
Since it appears that the Fed will be raising rates again this year,
Panamanian interest rates are also expected to go higher.

International loan to fix the
Transistmica

On May 17 the Cabinet Council approved a loan agreement with the
Corporacion Andina de Fomento by which the Panamanian government will get
an $80 million line of credit to finance improvements to the
Trans-Isthmian Highway and the roads and streets around Colon's three
container ports. Under the Pérez Balladares administration the government
contracted with Mexican promoter Máximo Haddad's PYCSA construction
company to build and operate, in addition to the still uncompleted
Corredor Norte, a Panama - Colon toll road. Despite multiple major
breaches in the contract with PYCSA it has never been voided, but the part
about the road connecting Colon to the capital has pretty much become a
dead letter. Poor conditions along the present highway have been the cause
of many accidents and protests by residents of communities that the road
serves, and improved road ingress and egress has for many years been a top
demand of the Colon Free Zone's merchants.

Chiquita, Italian company fight for
bananas

A proxy war between Chiquita Brands and the Italian Ale Fruit company is
being fought within the COOSEMUPAR banana workers cooperative, which runs
the plantations of what used to be the Chiquita Brands subsidiary Puerto
Armuelles Fruit Company (PAFCO). Chiquita had an exclusive marketing
agreement, by which it was paying well below the world market price for
bananas and the co-op was going ever deeper into debt and looking to the
government for a bailout. The co-op workers' union, SITRACHILCO,
approached Ale Fruit and negotiated a more favorable marketing deal.
However, the co-op board of directors was approached by Chiquita, which
made them an offer. The directors now want to stay with Chiquita and say
that the union that represents the co-op members has no right to talk to
anyone about banana marketing. It seems likely that the Chiquita - Ale
Fruit battle will end up in a rank-and-file challenge to the co-op board
of directors, and then wind up in Panamanian courts. If the government's
finger tips the balance in the dispute, one factor to consider is that
Vice President and Foreign Minister Samuel Lewis Navarro is a major
shareholder in Chiquita.

SUNTRACS sets May 29 strike date

There have already been brief street-blocking protests, but things might
get disruptive for real on May 29 if the Panamanian Chamber of
Construction (CAPAC) and the SUNTRACS construction workers union don't
agree on a new contract by that date. SUNTRACS is Panama's most powerful
and militant private sector union, but tends to know what the market will
bear. The problem is that prices have been going up almost across the
board and the government has slashed workers' expectation of future Social
Security retirement benefits, so workers will have a lot of lost ground to
make up. SUNTRACS represents more than two-thirds of Panama's 15,000 or so
construction workers and recently re-elected Genaro López, who famously
said "I try to be a good communist," as their leader. If SUNTRACS walks
out, look for pitched street battles between workers and cops and
monumental traffic jams in Panama City, not only around construction sites
but also near the University of Panama where the campus radicals would
take actions in solidarity.

Controversial park sale doesn't happen,
yet

A few years back the legislature set aside an area of some 15.2 wooded
hectares near the old Fort Clayton for a new building for itself.
Immediately environmentalists protested --- the land is adjacent to the
Metropolitan Nature Park and within the boundaries of Parque Nacional
Camino de Cruces. Or in the latter case, arguably "was," as the
legislature could arguably be said to have legally redefined the limits by
setting aside the woods to be torn down for their new building. The
protests stopped the legislature from proceeding in that locale, so the
assembly decided to put the property up for sale. That started the
protests again, to the extent that nobody put in an offer at the scheduled
May 11 bidding --- nobody wanted to buy a lawsuit against the Committee to
Defend Urban Forests and Las Cruces Trail National Park and friends.
Rogelio Paredes (PRD-Arraijan), who heads the legislative committee trying
to sell the land, complained about the constant agitation and vowed that
the bidding would be re-scheduled.

Balbina threatens owners of Casco Viejo
ruins

During the Pérez Balladares administration the government passed a number
of laws making it easier for property owners to evict tenants in the Casco
Viejo in order to remodel the buildings there, and various incentives for
restoration. But what happened was that a lot of owners threw the people
out, boarded up their properties and put up "for sale" signs, while many
other speculators bought the ruins of old buildings and held onto them in
hopes that prices would go higher and they'd make a lot of money. Now
Housing Minister Balbina Herrera is threatening to take ruins held by
speculators by eminent domain, and to fine property owners who have failed
to maintain their buildings as required by law. The prior warning is to be
taken with the knowledge that the government doesn't have the funds
budgeted for massive condemnations, but the people who have boarded up
buildings that were being used and are not fixing them may have something
to worry about. Then there's third government threat looming over some
speculators --- those who bought properties in the Casco Viejo with loans
from state-owned banks and are doing nothing to improve them may get their
loans called in.

Free Zone to take over Davis?

The Davis Export Processing Zone, an industrial park at the former Fort
Davis that the Pérez Balladares administration promised would create many
thousands of jobs but has actually created fewer than 100, is probably
gong to be transferred to the Colon Free Zone. La Prensa reports that the
Ministry of Economy and Finance has approved the move, but it still needs
to be accepted by the Free Zone directors.

Colon representantes demand bridge

The old Interoceanic Regional Authority (ARI) master land use plan had a
bridge over the northern end of the Panama Canal, but the Moscoso
administration never liked predominantly black Colon anyway so put the
second bridge over the canal on the Pacific side. Now the Panama Canal
Authority says it wants to close the swing bridge at the Gatun Locks and
replace it with a ferry to connect Colon's Costa Abajo with the rest of
Panama --- and that to be followed by another bridgeless body of water to
cross, the entrance to the proposed third set of locks. But to someone
needing to get to an emergency room, waiting for a ferry, or potentially
waiting twice for two ferries, can mean life or death. Thus all of the
representantes from the Costa Abajo's Chagres and Donoso districts, plus
those from Escobal and several others from Colon district, have formed a
committee to press for a bridge over the canal on the Atlantic side. There
have over the years been various bridge or tunnel plans drawn up, but
these seem to be no more a priority for the current administration than
they were for prior ones.

Small dolphin park planned

An American investor, Robin Bennett Friday, says he'll open a $2.5 million
marine park in San Carlos district's corregimiento of El Higo. The park,
which would have the region's first dolphin display, would open in 2007.
First, however, he'll have to get a permit from the National Environmental
Authority (ANAM). The environmental impact statement has been filed, but
not yet approved or rejected. There may be opposition, as there are
environmentalists and animal welfare activists who for various reasons
don't like captive dolphin shows.

Seed shortage

La Prensa reports that the Ministry of Agricultural Development (MIDA)
will have fewer seeds to distribute to needy farmers this year. About 500
farmers get seeds from MIDA, but the ministry has to pay higher prices
lately, largely because increased fuel prices have made it more expensive
to dry, treat, package and transport seeds.

Masferrer convicted

Banker Eduardo A. Masferrer, the former CEO of Miami's failed Hamilton
Bank, was convicted on May 10 of 16 accounts of bank fraud by a jury in a
Miami federal district court. According to federal sentencing guidelines
it's likely that he will receive a 10 to 12-year prison term. In an
earlier trial on the same charges last December, there was a hung jury and
a mistrial was declared. The Panamanian banker of Cuban extraction was
accused of hiding losses of some $20 million by the Hamilton Bank. This
was done, according to prosecutors, by purchasing essentially worthless
loan portfolios from Russian banks and misrepresenting their value in
order to deceive bank shareholders. After US authorities took over the
bank in 2002 the losses were discovered to be on the order of $160 million
and the shareholders lost nearly all of their investments. Masferrer's
lawyers argued that the Russian acquisitions were good-faith business
transactions that went bad because of economic fluctuations in Russia.
Originally charged along with Masferrer in the Hamilton Bank executives
Juan Carlos Bernacé and John M.R. Jacobs, who made plea bargains and
testified for the prosecution at the trial. Masferrer got his start as a
banker in Panama City's banking center with the Banco del Istmo, but has
not had anything to do with the management of that bank for many years. He
moved to Miami and took over the Hamilton Bank in 1989, building it into a
large operation by cultivating close financial ties with the city's
Cuban-American political and business elites.

Gringo charged with human trafficking

Victor Politis, a 54-year-old US citizen and proprietor of the Cristal
Moon bar in Calidonia, has been formally charged with human trafficking.
It is alleged that he important Colombian prostitutes to work at his
establishment, confiscated the passports and return flight tickets from
the women and then changed the terms of the labor contract he had with the
women. A couple of the women complained to the Colombian consulate here,
and this led to the charges.

Year in jail for bus scam

The managers of Interamerican Motors, Carlos Fonseca and Antonieta Strah,
have been fined $2000 each and sentenced to a year in prison for selling
buses to 14 driver/owners who serve routes in Arraijan that were
represented as new and of the Hino brand but were actually reconditioned
and equipped with inferior Asia brand parts. The jail time can be avoided
by paying an additional fine.

New boxing media

Roberto "La Araña" Vásquez's May 20 successful defense of his WBA Junior
Flyweight championship at the ATLAPA convention center in Panama City was
notable as a business story for two main reasons. It was the first time
Panama had ever used "pay per view" marketing of a boxing match, and it
was also the first time that a Panamanian athletic event was broadcast
over the Internet. The online video was by El Panama America. In order to
limit competition to MEDCOM --- largely owned by former President Ernesto
Pérez Balladares and his relatives --- Toro's administration passed
regulations forbidding newspapers to own television stations. But with the
growth of the Internet and use of streaming video, that distinction may be
circumvented. The El Panama America boxing broadcast --- which wasn't of
such wonderful quality, but gave fans with Internet-connected computers a
reasonable opportunity to see the fight --- thus may be a first step in a
revolution that could topple the current Panamanains television oligopoly.

Oxy says Ecuador's action won't affect
RP plans

Occidental Petroleum (Oxy) is studying the possibility of setting up a new
refinery in the deressed Chiriqui town of Puerto Armuelles. There are
still more than one year of studies to be done, above all about
environmental impact, but if the project goes ahead after all of that, it
would be a $4 billion investment. But would Oxy's recent ouster from
Ecuador put an end to those plans? Company representatives told El Panama
America that events in Ecuador won't affect its plans in Panama one way or
the other.

Spanish firm wins Puerto Armuelles
privatization concession

The Torrijos administration's privatization policy took another step with
the National Martime Authority's grant of the public dock at Puerto
Armuelles to SI Global, a Spanish consortium. SI will rebuild the dock and
invest in grain storage, seafood processing and drydock facilities, at a
cost estimated at between $9 and $11 million. The concession will have an
extensible 20-year term. The government hopes to privatize six more ports
in the course of this year.